Vodafone says Sayonara Japan

Vodafone is getting out of dodge – errr Japan, which is fast becoming a telecom Dodge City, thanks to a bitter price war between NTT DoCoMo and Softbank. Vodafone sold its Japanese subsidiary to Softbank for about $15.4 billion, after consistently losing market share and money. Softbank, in what is being called the biggest leveraged buyout in Asia, gets a wireless asset that will allow it to offer four-play services to its customers and compete NTT on an equal footing. Vodafone will get about $11.87 billion in cash. Rest of will amount to about 10% stake in a holding company, and some warrants. Vodafone had about 17% of the total Japanese market.

The proceeds of the sale will be used for giving out dividend to shareholders, but in my opinion, that is a classic bad move from greedy mutual funds. The company should be hanging on to its money and using it for growth in other countries where it can make a perceptible impact. On the flip side, this sale takes away a lot of pressure from Vodafone to make a hasty deal with Verizon Wireless. It now has enough breathing room to basically negotiate a premium for its share in VZW.

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